Download our Tax Alert in PDF: Alert – IMMEX Tax Forum
Last Tuesday, the National Council of the Export Manufacturing and Maquiladora Industry, Index, organized the 1st National Tax Forum of the Export Manufacturing Industry.
Ms. Myrna Aguilar, of the Transfer Pricing area of the Tax Administration Service (SAT), said that SAT has APA applications corresponding to the period from 2013 to 2017 that are still pending resolution. She suggested that taxpayers can apply the alternate procedure known as Fast Track and approach SAT to dissipate doubts.
Mrs. Aguilar considered that SAT must analyze and resolve each particular case, respecting the right that taxpayers have to request an individual resolution regarding transfer pricing and not oblige taxpayers to apply a procedure that may give them a theoretical profit margin higher than what they actually get in their operation.
On the other hand, she indicated that next October SAT will meet with the Internal Revenue Service (IRS) of the United States in order to analyze the possibility of continuing with the Fast Track procedure for the years from 2018 to 2022.
In the forum, the different problems regarding the delay of VAT tax returns in the manufacturing sector were exposed, for example, the excessive information requirements issued by the tax authority, the breach of deadlines for returning VAT favorable balances for certified companies and the different criteria applied by the authority to deny applications. In this regard, Mr. Luis Balderas, Director of the Area of Complaints of PRODECON (Tax Ombudsman), suggested using the procedure called “Complaint” (Queja) to try to expedite the resolutions of the tax return applications filed by the taxpayers.
On this point, he believes that taxpayer should initiate and exhaust the Complaint procedure before PRODECON when the taxpayer believes that his tax rights were violated before using one of the traditional legal remedies, e.g. Revocation Remedy or administrative lawsuits, which have the disadvantage that they take more time than the Complaint.
Yesterday, the President of Mexico, Enrique Peña Nieto, signed the decrees that created Mexico’s Special Economic Zones (SEZ), which was published this Friday (September 29, 2017) in the Official Gazette.
The first three SEZs will be located at Lázaro Cardenas-Unión (State of Michoacán and Guerrero), Puerto Chiapas (State of Chiapas), and Coatzacoalcos (State of Veracruz), where investors will benefit from tax, business, and trade facilitation measures and incentives. These decrees contain the details of this new and aggressive economic policy that seeks to attract investment.
Throughout this year, VTZ has reported on Mexico’s SEZ and made available a report outlining the legal framework, check out our VTZ SEZ Report, along with several updates. For more information, contact Mr. Emilio Arteaga Vázquez (firstname.lastname@example.org).
On February 10, 2017, the Mexican Minister of Treasury – José Antonio Meade Kuribreña – attended a meeting of the National Confederation of Governors, held in Lázaro Cardenas, where he announced the tax incentives that the federal government will provide to those companies that invest within Mexico’s Special Economic Zones.
The present Update aims to complement our Report on SEZ, which was published last month, and it will inform the following:
To download the Update, please click here: Update-SEZ-13022017
Joint ventures in Mexico are normally atypical contracts. If doing business in Mexico through a joint venture, we note that the Mexican Company Law does recognize a certain type of joint ventures, i.e. strategic partnerships. This does not mean, however, that the Law does not recognize the existence of other joint ventures, because they are, in the end, contracts. And, contracts can take different legal structures, shapes, or forms in Mexico.
Accordingly, joint ventures are the “genre” while “strategic partnerships” and “co-investments” are the species, and one could define these concepts as follow:
A Joint Venture implies two natural or legal persons that come together to work on a common project, basing their relationship on a contract. In essence, it creates a sort of partnership without necessarily creating a new, distinct legal person.
Strategic Partnerships or Strategic Alliances, a species or type of joint venture, are agreements that entail a collaboration project between two persons or firms. The idea is to share resources (offices buildings, researchers, clients, expertise, etc.) and risks (without the guarantee of obtaining any results). In other words, each firm provides qualities or features that the other firm requires for which the purpose or end may be common or different. In this type of joint venture, it is possible for the parties not to invest in money, but rather in their qualities or characteristics.
An example may be when an establishment allows another firm to use their facilities for other purposes other than those it ordinarily is involved in, so as to increase the flow of customers in its stores (i.e., express delivery services located in stationeries).
In contrast with Strategic Partnerships, a Co-investment is another joint venture species whereby two persons or firms invest money or goods in a common project. This type of joint venture involves joint management and parties, therefore, make decisions together.
As for the clauses contained in joint venture contracts, these can vary significantly since they are not expressly regulated in Mexican Contract Law.
The common clauses are the following:
As for other legal considerations, it is important to note that joint ventures may be considered as legal persons for tax purposes in Mexico and even give rise to the creation of permanent establishments for foreign investors in Mexico.
In that sense, when drafting a joint venture contract it is critical to take into account Mexican Tax Law and/or any relevant Tax Treaty. Finally, the Federal Competition Law must also be taken into consideration since anti-trust issues may arise with joint-venture contracts.
For more information, visit the following link: VTZ – Business Law practice
Do you need help or advice, feel free to contact us.